Case of the Carlyle Group: Fund Investor vs. Firm Investor
04. May, 2012
Is it optimal to invest in a private equity fund, invest in the private equity firm, or both? Sovereign funds and public funds have done it all. Over the years, we have seen deals like the China Investment Corporation’s investment in the Blackstone Group. We have seen CalPERS and Mubadala Development Co. invest in the Carlyle Group and so on. In our estimation, it seems that private equity funds do better than private equity firms when it comes to financial returns.
From CalPERS: Select Private Equity Fund Performance (Firms that have gone public)
| Fund Name | Vintage Year | Capital Committed | Net IRR |
|---|---|---|---|
| Apollo Investment Fund V, L.P. | 2001 | 250,000,000 | 38.10% |
| Apollo Investment Fund VI, L.P. | 2006 | 650,000,000 | 4.30% |
| Blackstone Capital Partners IV, L.P. | 2003 | 185,012,814 | 38.60% |
| Blackstone Capital Partners V, L.P. | 2006 | 750,000,000 | 0.50% |
| Carlyle Europe Partners II, L.P. | 2003 | 69,157,100 | 21.70% |
| Carlyle Asia Partners III, L.P. | 2008 | 300,000,000 | -10.80% |
| Carlyle Partners V, L.P. | 2007 | 1,000,000,000 | 7.20% |
| Carlyle Strategic Partners I, L.P. | 2004 | 50,000,000 | 32.50% |
| KKR Asian Fund, LP | 2007 | 275,000,000 | 10.60% |
| TPG Partners VI, L.P. | 2008 | 855,000,000 | -2.80% |
Source: CalPERS | The chart avoided private equity funds with a vintage year greater than 2009.
Private equity funds have known risks. They can become zombie funds, lock up capital, produce lowered IRRs, basically lose money for investors. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]
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